Solve the following from 1-3 step by step providing answers to the closest cent. Accuracy of 4
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Question:
Solve the following from 1-3 step by step providing answers to the closest cent. Accuracy of 4 significant figures is expected.
Your company needs a new system for the next eight years to evaluate transmission lines. The two ways to obtain this equipment, purchase or lease are described below. The interest rate is 5% per year.
A. Purchase: Initial cost of $12,000, a $1,200 salvage value and an eight year useful life.
B. Lease: $2,250 per year paid at the beginning of the year.
- What is the present worth of the Item A, the purchase choice?
- What is the present worth of Item B, the lease choice?
- Which choice would you recommend for the company?
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